Power distributors will have to absorb the cost of renewable energy certificates (RECs) purchased above prevailing market rates instead of passing the difference on to consumers, under a new recovery treatment approved by the Energy Regulatory Commission (ERC).

In an advisory on Thursday, the ERC said distribution utilities (DUs) may recover from captive customers only the amount corresponding to the verified lowest-cost benchmark for certain REC purchases made to comply with the Renewable Portfolio Standards (RPS).

Consumers protected

Consumers will be protected from paying the premium when a utility buys RECs at a price higher than the lowest verified price available in the Philippine Renewable Energy Market System (PREMS).

“For avoidance of doubt, only amounts corresponding to the approved recoverable rate shall be passed on to end-users,” the ERC said.

“Any disallowed variance between the actual REC contract price and the applicable verified lowest-cost benchmark shall be for the account of the concerned DU and shall not be recovered from captive end-users,” it added.

Electricity generated from eligible RE sources

RECs are certificates representing electricity generated from eligible renewable energy sources. Power industry participants use them to meet RPS requirements, which mandate a certain share of electricity supply to come from renewable energy.

The ERC has had rules governing the recovery of RPS compliance costs since 2024.

Under the latest treatment, REC purchases made at or below the verified lowest-cost benchmark at the time of the transaction may be fully recovered from consumers at the actual contract price, subject to supporting documents and ERC verification.